As reported by the Wall Street Journal, cryptocurrency investors are taking advantage of the Palau digital residency program to access crypto exchanges such as Binance which does not have a US license. The Pacific micronation charges only a $248 fee to make a remote user a “digital resident” of the country for a period of one year.
How Does Palau Digital Residency Work?
It was January 2022 when the government of Palau launched its digital residency program titled RNS. How it works is you create a profile, pay the $248 commission, and if you pass the screening, you’ll get an identity card from Palau.
It usually takes about 10 days for the Palau government to do an anti-money-laundering check on the applicant. The Palau digital residency doesn’t equal citizenship, but those who are approved do get an ID which they can use to create accounts at various online platforms, including crypto exchanges.
US Crypto-Heads Using the Scheme to Access Sites Like Binance
If you do a Google search for the term “Palau digital residency” or look it up on social media, you’ll notice that most people discuss it in relation to cryptocurrencies. So, what’s connecting the two?
Well, those with a Palau ID can sign up to crypto exchanges such as Binance, which is banned in the United States. As these platforms are dealing with money, most of them require their users to provide some sort of ID.
And considering that Binance doesn’t have a US operating license, Americans cannot create a profile on this site with a US ID. But they can do it with one issued by Palau, basically going around the federal ban.
Well, that’s exactly where the problem lies, and why we might see the Palau digital residency program come to an end sooner than later. The whole point of not licensing certain crypto exchanges was to protect American traders.
Plus, even the Binance founder Changpeng Zhao has decided to stop promoting the scheme after doing more research on the subject.